By Suzanne Kapner
A strong U.S. economy and robust consumer spending weren't enough to boost holiday sales at many department stores and mall-based chains, as Americans continue to shift their purchases online and to other retailers.
J.C. Penney Co., Kohl's Corp. and Victoria's Secret parent L Brands Inc. all reported lower sales in the critical months of November and December. All three companies entered the holiday season on weak footing, with falling sales as they lost orders to Amazon.com Inc. as well as traditional rivals such as T.J. Maxx and Target Corp.
"Our customer data shows that a chunk of clothing spend from Kohl's customers has migrated to other retailers, most notably to Target and various off-price players," said Neil Saunders, managing director of research firm GlobalData Retail. "This is reflective of the weaker proposition at Kohl's but also underlines the success Target has had in improving its own offer."
The sales updates came a day after Macy's Inc. reported its comparable sales fell 0.6% in the holiday period and said it would close 29 stores. Bed Bath & Beyond Inc. also reported a drop in comparable sales for the third quarter. Comparable sales generally include online sales and reflect stores open at least a year.
Not all traditional retailers are struggling. Walmart Inc. and Target have reported rising sales and store traffic for much of the past year, as they ramp up online ordering and in-store pickup services. Off-price chains such as TJX Cos. have also logged healthy sales.
Warehouse club operator Costco Wholesale Corp. reported comparable sales jumped 9% in the five weeks ended Jan. 5. The results include e-commerce sales and international stores. Costco shares rose 1.6% Thursday, according to FactSet, and, like shares of Walmart and Target, are trading near all-time highs.
J.C. Penney's comparable-store sales fell 7.5% during the nine-week stretch that ended Jan. 4. Excluding appliances and furniture, categories it exited last year, comparable sales fell 5.3% in the period. The retailer maintained its financial targets for the fiscal year, which includes January.
Penney's shares, which have hovered around $1 apiece, fell 10.8%.
Chuck Grom, an analyst with Gordon Haskett Research Advisors, said the continued decline in Penney's sales gives him little hope the company will be able to turn things around this year.
Kohl's said its comparable sales for November and December slipped 0.2%, citing weakness in its women's apparel business. It also warned that profits would be at the low end of its prior target range. Shares closed down 6.5%.
"We are managing the business with discipline and we expect to deliver on our earnings guidance for the full year," Chief Executive Michelle Gass said.
Department stores have been losing ground to other retailers for decades. At the end of 2019, department stores accounted for 1.2% of total retail sales, down from 5% in 2005 and 9.5% in 1980, according to research firm Customer Growth Partners. Despite that decline, the chains haven't closed stores fast enough, according to Customer Growth data.
Adidas, Nike and Under Armour brands have become increasingly important at Penney's and Kohl's in recent years. Those are the three largest brands in Amazon's apparel and footwear category, according to Stackline, which monitors online sales.
L Brands said comparable sales, which include sales from company-owned stores in North America open at least a year and digital sales, fell 3% for the nine weeks ended Jan. 4.
The company, which also owns Pink and Bath & Body Works, said it now expects fourth-quarter earnings of $1.85 a share. It had previously guided for earnings of $2.00 a share. Shares rose about 4.5%.
Other retailers reporting holiday results included Urban Outfitters Inc., which posted lackluster sales at its eponymous brand. Following the news, shares of the company fell 9% in after-hours trading.
Urban Outfitters, which also owns the Anthropologie and Free People brands, said comparable retail sales at its namesake stores fell 1% for the two-month period ended Dec. 31. Anthropologie fared better with comparable retail sales up 5%.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com